If a Competitive Firm Is Currently Producing a Level of Output

question 239

Multiple Choice

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

• A)a one-unit increase in output will increase the firm's profit.
• B)a one-unit decrease in output will increase the firm's profit.
• C)total revenue exceeds total cost.
• D)total cost exceeds total revenue.

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Definitions:

Sales Discount

A reduction in the sale price offered by a seller to a buyer, typically to prompt early payment or reward customer loyalty.

Freight Costs

Freight costs refers to the charges involved in transporting goods by land, sea, or air. This includes the expenses associated with moving merchandise from the point of origin to its destination.

F.O.B. Destination

A shipping term indicating that the seller bears the freight charges and retains ownership of the goods being shipped until they reach the buyer's location.

F.O.B. Shipping Point

Purchaser pays or is responsible for the shipping costs from seller’s shipping point to purchaser’s location.